Insee Analyses · July 2023 · n° 86

How car drivers adjust fuel spending to short-term price changes

When prices increase by 1%, short-term consumption decreases by 0,21% to 0,40%, based on estimations issued from daily bank account data over a period that ranges from September 2021 to January 2023. This price sensitivity is three times higher for occasional car drivers than for intensive car drivers, but it varies little with income and location (urban, rural or peri-urban areas). Consecutive to a given price increase, though, households living in rural or peri-urban areas as well as intensive car drivers (who all consume more fuel) decrease more their fuel purchases.

In 2022, the French government decided to introduce discounts at the pump in order to mitigate the rise in fuel prices that followed the crude oil price surge. Simulations suggest that those rebates alleviated car drivers’ fuel spending by 51 to 81 euros, on average. Individuals in the top 25% of income benefitted more from that tax policy (between 64 and 115 euros, to be compared with 29 to 48 euros for the bottom 25% of income), yet this represents a smaller share of their income. Those estimations take the increase in fuel consumption consecutive to the rebates into account.